IRS Circular 230

[J2D2]

Has anyone had occasion to consider the impact of the new Circular 230 provisions on their "regular" benefits practice? In other words, if you are not engaged in rendering opinions on tax shelters, how will the new rules affect you?

[GBurns]

Circular 230 is in no way limited to "rendering opinions on tax shelters".

[J2D2]

Understood, GBurns. My question goes to how the changes will affect those aspects of employee benefits practice other than "rendering opinions on tax shelters."

[GBurns]

Is there a definition of tax shelter or any guidance as to what is regarded as being a tax shelter for purposes of circular 230 and the related Treas Regs?

[jaemmons]

Leonard Witman gave an extremely informative presentation at the MABC in Philadelphia on 5/24 concerning Circular 230. The one item that I thought would immediately impact the benefit profession is the admission of email correspondence in possible litigation suits. Electronic communications were included in the definition of a "covered opinion" in the Circular.

[Bird]

Any other thoughts on this? Here are my comments:

1) They list "best practices" which are aspirational and mostly common sense, IMO.

2) They give requirements for "covered opinions" with a lot of definitions that put me to sleep, but include a caveat that says "A covered opinion does not include...(B) written advice...that - (1) concerns the qualification of a qualified plan..." (I don't think the stuff I edited out - about listed transactions and transactions where the principal purpose is avoidance or evasion - applies, but I'm no expert...)

As a TPA, I don't see this as a threat, but I'm interested in other opinions.

[mbozek]

Can someone explain what is the concern about the changes to circular 230 to providing advice to qualified retirement plans? Unless the opinion pertains to a listed transaction e.g, certain tax deferral strategies which are specifically listed in the regs, providing tax advice on a qualified plan is not a covered opinion which would necessitate a disclaimer that the advice was not written to be used for the purpose of evading penalities.

Also Circular 230 applies to persons who are admitted to practice before the IRS as a representative of the taxpayer, e.g. attorneys, CPAs, enrolled agents and actuaries. A TPA or other person who cannot represent taxpayers is not subject to these rules.

[Bird]

That's my point; I don't see the problem, especially for a TPA who isn't an attorney, CPA, or actuary, but even for those professionals I don't see the changes as a threat.

[E as in ERISA]

Here are some articles that have been posted on this web site.

This says no exemption for nonqualified: http://www.bnatax.com/tm/insights_CPJ3.htm

This says actuaries want confirmation that certain activities fit in the exemption for written advice concerning "the qualification of a qualified plan": http://www.actuary.org/pdf/pension/circular_050905.pdf